It is a pleasure for me to come again before the Committee of the Regions to
discuss the latest developments in Cohesion policy. On this occasion, I would
like to present the 4th Cohesion Report recently adopted by the
Commission and to exchange views with you on its main issues and proposals.

Our time is limited today but I would like first to thank Mr Ancisi and his
team for preparing the opinion on Regions For Economic Change. Allow me to give
an initial response to the main points of your opinion and, at the same time, to
update you on progress on the implementation of the initiative so far.

I warmly welcome your wish to be involved in Regions For Economic Change
through your roles of representation, cooperation and support. We would be
pleased to have one of your Members to sit on the selection committee for the
annual RegioStars awards. In addition, our services are already exploring
further opportunities for cooperation, including in relation the Lisbon
Monitoring Platform, the annual Regions For Economic Change conference and other
communication activities. Our Regions For Economic Change website has already
been updated to include a link to the Lisbon Monitoring Platform of the
Committee of the Regions.

I have also noted your wish to be actively involved in the drawing up of the
operational programmes for INTERREG IV C and URBACT II, and for one of your
members to sit on the monitoring committees for these programmes with
consultative status.

On these points, I can inform you that these matters are within the
competence of the relevant programme Managing Authorities and monitoring
committees. My services therefore brought the draft opinion to the attention of
these authorities so that appropriate action may be taken. I encourage you to
directly contact the Managing Authorities of INTERREG IV C and URBACT II in
order to formally raise with them your wish to be involved.

As you know, the networking activities of RFEC will be delivered through the
future INTERREG IVC and URBACT II programmes. Following the normal consultation
processes, both draft programmes were formally submitted to the Commission in
April and we hope to adopt them by the early autumn. Next step will be calls for
proposals launched by the Managing Authorities of these two programmes so that
interested partners can submit applications. This bottom-up
approach, allowing partners in regions and cities to propose their own networks,
is in line with views expressed by the Committee of the Regions.

The Committee of the Regions has a vital role to play in promoting Regions
for Economic Change initiative. Therefore, I would like to use today's
opportunity to urge partners in regions and cities to do two things:

to identify the themes relevant for them and to start to prepare
partnerships ready to submit project applications to the INTERREG IVC and URBACT
II programmes;

to work with the Managing Authorities in the regions in order to ensure that
the networks they would like to create fit the priorities of the regional
Operational Programmes and that these regional Operational Programmes have the
scope to take on and mainstream the outputs of the RFEC networks.

I
will unfortunately not be able to come to your meeting this afternoon on the
European Grouping for Territorial Cooperation, but you know how important
this instrument is to me. So, let me say couple of words also on this.

• When the Commission announced in its 3rd Cohesion Report
a new legal instrument – at that time named "Cross-border regional
authority"- not many would have betted on its swift birth. However, not least
thanks to political support from this Committee, the Regulation on the
European Grouping of Territorial Cooperation came to life on 1 August
last year. The Member States have time until 1 August this year - thus very soon
- to make appropriate national provisions ensuring the application of this
Regulation. However, from a questionnaire sent in April to the EU capitals
appears that most of the Member States will not be ready by end of July.

• This is not good news as we all know how badly this instrument is
needed by European regions. We see a lot of interest on the ground. So I would
like to ask for your support in urging the Member States to adopt these national
provisions as soon as possible.

• Let me now move on to the Cohesion Report which, as you know very
well, is published by the Commission every three years, in accordance with the
Article 159 of the Treaty. It is our most important policy document which, as it
was the case in the past, combines the assessment of the past with the launching
of a new debate on long term policy future.

• It also comes right after European leaders appreciated the role of
the regions and the role of subsidiarity by stating in the Berlin declaration
that: "There are many goals which we cannot achieve on our own, but only in
concert. Tasks are shared between the European Union, the Member States and
their regions and local authorities". This is very important, as – for
the first time – we had a clear recognition of the role of European
regions in the Union's system of multi-level governance.

• The report contains a résumé of the different analyses on
the disparities in the enlarged EU and on the contribution of Cohesion and other
EU and national policies to cohesion, including some preliminary assessment of
the content of programming documents submitted by the Member States for
2007-2013.

• It carries out a thorough analysis of the disparities in the EU-27
in the last decade on the basis of a large set of indicators which draw a
picture of the level and trends of economic, social and territorial cohesion.
Beyond GDP, other indicators are used to estimate productivity, employment,
demographic changes and migration flows, poverty, transport and ICT
accessibility, environmental sustainability, energy, education, innovation etc.

• For the first time Cohesion Report contains global comparisons
between regions and major EU competitors on a range of indicators. This reflects
the view which I expressed many times to you, namely, that sustainable
convergence can only be achieved if we take into account the international
context in which EU economy operates.

Let me summarise the main results emerging from the analysis:

Independent analyses and evaluations demonstrate that convergence is
occurring in the Union both between Member States and between regions and
that this process will continue in the future. In 2004, the top regions (with
10% of the population) had a GDP per head that was almost 5 times higher than
that of the bottom regions (with 10% of the population), while in 2000 it was 6
times higher. Yet, in 2004, there are still 70 regions home to 123 million
Europeans with a GDP per head below 75% of the Community average, both among EU
12 and EU 15.

• New MS are growing fast which also translates into regional
convergence, due to strong economic performance in regions with low GDP. At the
same time, high growth rates in more peripheral regions and countries results in
less geographic concentration in the traditional core of the Union. This is good
news, because it shows that the core can expand into the periphery and tap the
new growth potential existing there.

• There is also rich evidence that most regions throughout the Union
are and will be confronted with a changing pattern of challenges, some of
which you already discussed yesterday like demography, energy or climate change.
For example:

o There are many regions in the Member States which see
population decline. In 2005, national population growth rate was less
than 0.1% and 86% of population growth was due to migration. Between 2000 and
2003, 85 regions of the Union (mainly in the new Member States) experienced
absolute population decline, and another 76 maintained population growth only
thanks to migration.

o We have 61 regions in the Union whose economic structure is
largely concentrated on sectors where competition from emerging economies
is very high – such as textiles, steel making or ICT and electronics
production.

o Leading edge economic activities and talent are geographically
concentrated in a few urban centres that are global players. This is
creating opportunities, but also problems such as pollution, urban sprawl, and
congestion.

o Many regions throughout Europe will be increasingly confronted
with the asymmetric impact of climate change as well as with new
challenges in terms of energy provision and efficiency. 7% of people in
the Union live in areas at high risk of flood; on the other hand around 9% of
the EU population live in an area where there are over 120 days a year, on
average, without rain. The combined impact of climate change will affect tourism
and agriculture in EU regions.

o Regions will also have to cope with a number of social
challenges posed by increasing skill mismatches as the economy moves
up the value chain into knowledge based activities. Education levels are
increasing, but the proportion of people aged 25-64 with a university degree in
lagging regions is still less than half the proportion in better-off
regions.

The Cohesion Report also examines how policies at national level have
operated in the past, and to what extent they are adjusting to respond to these
challenges. The important finding is that in the last decade we witness the
combination of declining public investment among Member States and its
devolution, giving more weight in to regional and local levels. The share
of local and regional authorities in public investment increased from 25.4% to
26.8%. This process is driven by a raising awareness of efficiency gains,
implied by better use of subsidiarity – one of the key principles of the
European regional policy.

Now I would like to highlight the
impact and effectiveness of cohesion policy on the basis of independent
evaluation results. The report argues that Cohesion Policy has played an
important role in the convergence process because:

• It has supported much-needed investment in infrastructure,
human resources, and the modernisation and diversification of regional
economies. Between 2000 and 2005 in the four EU-15 cohesion countries, public
investment has been around 25% higher than without cohesion policy.

• It has contributed to the growth of GDP. Estimates suggest an
increase in GDP compared to a non-policy scenario:

o 2004-2013: By around 9% in the Czech Republic and Latvia, 8,5% In
Lithuania and Estonia, 6% in Bulgaria and Slovakia, around 5.5% in Poland;

o 2000-2013: By around 3.5% in Greece and 3.1% in Portugal.

It has also created new jobs, thus contributing to the reduction of
social exclusion and poverty: cohesion policy co-finances the training of 9
million people annually, leading to better employment conditions and higher
income; between 2000-2005 over 450 000 gross jobs were generated in Objective 2
regions in six Member States (2/3 of Objective 2 funding) and it is estimated
that around 1.400.000 additional jobs would be created in Convergence regions
between 2007 and 2013.

And it shifted the policy mix of public investment in Member States
toward growth-enhancing investments. The amount of cohesion investment
earmarked on R&D, innovation and ICTs for 2007-2013 has more than doubled in
comparison with 2000-2006. Clearly, we need to see how these plans will be
implemented on the ground; but we see both among MS and regions an increasing
awareness that they development strategies for 2007-2013 must be "innovation"
driven.

Finally, the 4th Cohesion Report poses a set
of questions for discussion about the vision of the policy in the next
decades, which will be dominated by new challenges and opportunities:

The first group of questions, on the basis of the analysis
provided by the report, takes stock of new, global developments which in the
coming years will have increasing impact on the EU economy. To what extent new
policy challenges will affect regional economies? How they should best respond
to these trends?

The second group of questions looks at the possible
responses that cohesion policy can develop to foster growth and development in
the context of these new, global challenges. Which new, competitive advantages
and skills will our regions and citizens need to be competitive in the future?
How important is the territorial/regional dimension in this respect?

Finally, the last group of questions focuses in more detail
on the way the cohesion policy should operate in the future in order to be even
more performance based and effective.

I am now looking forward to
listening to your views of the Committee on these questions and your opinion on
the Fourth Cohesion Report. As you know, on 27 and 28 September the Cohesion
Forum will be held in Brussels. The Forum will bring together more than 1,000
policy makers - among them members of this Committee - to discuss the findings
and proposals of the report and to launch the first ideas on the future of
Cohesion Policy. This debate will then continue under the Portuguese and
Slovenian Presidency. My intention is that the fifth progress report on economic
and social cohesion will draw first bilan of this debate in Spring 2008.
In order to facilitate the participation of all stakeholders in this process I
also intend to open a dedicated internet site which will collect all
contributions. Ultimately, all the ideas which will emerge during this
discussion will constitute the basis for the 5th Cohesion report (2010) which
will put on the table the Commission's proposals for the post 2013 cohesion
policy.